PAHO, Latin American Governments Should Discuss "Realistic" Pricing for ARVs, Not Compulsory Licensing, Opinion Piece Says

When Latin American health ministers gather this week for a meeting of the Pan American Health Organization, they should discuss "more realistic" ways of "differential pricing" for antiretroviral drugs, instead of threatening to use price caps and compulsory licensing to control the cost of the drugs, Martin Krause -- dean of ESADE Business School in Buenos Aires, Argentina, and professor of economics at the University of Buenos Aires -- writes in a Washington Times opinion piece. Under differential pricing, drug prices are lowest in the poorest countries, such as Malawi; higher in middle-income countries, such as Brazil; and highest in wealthy countries, such as the U.S., Krause says. However, price caps and compulsory licenses, under which governments grant permission to local companies to produce generic versions of antiretrovirals, "already have a predictable effect on new medicines' supplies," Krause says, asking, "Why would a company risk millions developing a new medicine if it is unable to recover its costs?" Almost all "useful pharmaceutical innovations" have been developed under "free enterprise, underpinned by property rights and the rule of law," Krause writes, adding that "PAHO's agenda for price caps would weaken the incentives that drive such innovation." In addition, Krause says that "if the profitability of developing and manufacturing" antiretrovirals is broken down, HIV-positive people in the poorest countries will suffer because drug companies no longer would be able to provide low- or no-cost antiretrovirals or knowledgeable health care workers to administer the drugs. Therefore, health ministers at the PAHO meeting should "make a commitment to improving the rule of law in their countries -- rather than underpinning it with threats of compulsory licenses," Krause concludes (Krause, Washington Times, 9/27).

Back to other news for September 28, 2005

Search the Newsroom archive